Your Money and careers writer for the NZ Herald·NZ Herald·
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Diana Clement is a freelance journalist who has written a column for the Herald since 2004. Before that, she was personal finance editor for the Sunday Business (now The Business) newspaper in London.
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When aged care suddenly becomes necessary, understanding New Zealand’s assessment process, subsidies, and costs helps families make informed, less stressful decisions. Photo / 123rf
When aged care suddenly becomes necessary, understanding New Zealand’s assessment process, subsidies, and costs helps families make informed, less stressful decisions. Photo / 123rf
THE FACTS
Aged care requires a needs assessment to determine the level of care needed.
Care is subsidised if assets are below $291,825; costs vary by location and room type.
Planning ahead with enduring powers of attorney and understanding asset rules is crucial.
For many New Zealand families, the reality of aged care arrives suddenly. In my case, a relative had a fall, spent months under Auckland Hospital care, and eventually needed to be discharged somewhere with 24/7 support.
Usually a spouse or adult child ends up navigating the system, findinga rest home and understanding subsidies. Like most people, I’d only thought vaguely about how this all works in practice.
The first thing to know is that your relative must be assessed as needing long-term care. The needs assessment, carried out in hospital or by a community team, will confirm what level of care: rest home, long-stay hospital, dementia, or psycho-geriatric. Call Seniorline on 0800 725 463, for advice.
A needs assessment determines what level of long-term care your relative requires and is the first essential step in accessing aged care support. Photo / 123rf
If the move is sudden, as many are, there’s a good chance that a preferred facility is full, or a different type of care is needed. Even if the person lives in a retirement village, a rest home bed may not be available there despite earlier marketing promises.
The cost of care
Rest home and other aged care is subsidised if the person lives on NZ Super alone and has assets below the threshold. For 2025, a single person aged 65 or older must have $291,825 or less in total assets to be eligible. If a spouse or partner is also in care, the combined assets must also be $291,825 or less.
Financial eligibility and asset thresholds play a central role in determining the extent of government support and personal contributions toward aged care costs. Photo / Getty Images
If a partner remains living at home, you can choose whether to include the value of the family home and car in the asset calculation: excluding them, the limit is $159,810, or including them, the limit is $291,825.
People who have more than the asset levels above need to contribute up to a maximum weekly charge set by the government. That charge ranges from $1460.27 in the Far North District to $1571.57 in Auckland City. If you’re not a New Zealand citizen, or haven’t been assessed as needing care, then you’ll most likely be charged more.
The charges above are for a basic standard room. The rest homes and other facilities can charge more for a larger room, a private bathroom, and other “extras” such as a view, ensuite, enhanced decor and so on. Charges for these “premium” facilities range from $10 to $85 per day extra.
Planning ahead
The best time to think about aged care is well before it’s needed. Getting enduring powers of attorney in place is really helpful. Your friend or relative may be in no fit state to make decisions, fill in paperwork and so on when they actually move into care.
Planning early helps make future care decisions easier and less stressful for everyone involved. Photo / 123rf
It’s too late at this stage to set up family trusts. Any gifts to trusts or individuals over $7000 per year (per couple) in the five years before applying for a rest home can be counted back as assets. Earlier gifts of more than $27,000 per year per couple are at risk of being clawed back.
Be aware that some members of the family can become very difficult when care is mooted, because they don’t want to lose “their inheritance” to rest home fees. They might argue: “mum doesn’t need care, she’s fine at home”. The person may feel guilty, but the goal is often financial.
Families can use options like KiwiSaver savings, term deposits, shares, or home equity to help cover rest home costs when a relative’s assets exceed the subsidy threshold. Photo / Getty Images
Other options for paying the fees include: a reverse mortgage, which allows older homeowners to access equity in their home without selling, though interest compounds over time. Some families rent out the home rather than sell it, and use the rent to cover rest home fees.
The bottom line is to educate yourself in advance. It’s likely this will be an emotional time for you and your friend or relative. The less you have to scramble when it happens, the better.
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